tv Defense News With Vago Muradian ABC January 10, 2016 11:00am-11:31am EST
♪ vag welcome to defenses. adnistration officls have said the requests will be in line with the bipartisan budget agreement stck late last year that averted another government shutdown. that phrase the pentagon's billion dolla, more funding than dod got last ye, b $15 billion less than what the admininistration had planned to spend. last week we met with frank kendall, the undersecretary of
defense of logistics at ththe pentagon to discuss innovation and industrial policy. i ask about the shortfall and with the psible -- what the departmert has to do to meet it. igoing to hp out planning as we execute 16, going forward into 17. under the budget over $15 billion. wewe have to dide how we are gog to absorb that. -- vago:k -- votto would there be ananyhanges that could be aicipated in some of those bigger proams, even ifif they cost yoyou money downwnstr?
frank: we have talked to the past about how all of our programs have to be under scrutiny. have and whatever we end up with total budget. vago: there are some internal moneys that can help plpe this shortfall over. how much can you rely on efficiencicies and other thingso bring you closose to that? are doing tngs like headquarter reductions. we have been at that for several years now. leave a lotct to of money lying around. unfortunately we he done that several times. thehe 2017 budget is going to be out very soon and everybody eager to see it. i know you can't didiscuss somef the details.
but what are some of the broader thinings? frank: he is clear about thehe fact that we are looking at several challenges a and problem what irelatively different in driving this budget is the importance of potential competitors, russia and china in particular. northproblemsms with korea and iran. specific problems putting in t budget. and offset of increased ,arr fighting, experimentation as well as wargaming, is that something we are going to see is a highlighghted future? tre is a need for current operations, need for
modernization, and all those things compete. it give for an -- given priorities and the current fight, but longer-term capabilities, we are trying to rebalance along g those lines. that there is only so muchlexibility.. we are trying to do some things in the offset strategy on the higher-end competitors, which i have been talking about for quite some time. we are talking about some things toto move the ball forwardrd ina way that is latively inexpensive. talking about demonstration programs, early technology work that reduces lead time to getting an actual capability, but doesn't have the cost,, especially full-scale program. vago: the secretarary has said third offffset extermination and
gagaining. where does that money come from and d wherare some areas where th is going to be focused? that is even more money thanas to be found from someplace at a time you havto do $1billion. jfrank: thahat of a focusus one higher-end threats. respond too you folks who say that is not enouoh money? frank: we have to strike a lance, we have the ongoing campaigns. we have a need to providide stability y around the world to our partnersrs, and the neeeed o have our f forces as reaeady as possible. it is getting that balce rht ththat drives the whole processs we go through the e budget formulatio vago: are there any things that are going to be prioritized with concerns whe we are gog to be strengthening capabililities? is a: this chain situation driver.
program. me go to a you alreadsaid on at 35, we are going to have to stay tuned that decision. one decision that happened late last yr that caught folks by surprise was dr. carter's decision of combat ship. sesecretary hagel just a year ao decided the navy''s plan would stick to df -- sti to two contractors and dr. carter came through lt year and said we are going down to one type and build 40 of the ships. what was his rationale for that decision? frank: w i will let secretary carter explaed that. the trade-offs are higher-end threats. the sidends to be on
of a presencwith more pabilities vago: you meioned it may be better for -- one of the otr major programs was a long-range sike brought -- strike bomber. the decion was made, but everything remains classified. the bcontractors are classified, lies that ininformation ststill classifie? you are familiaiar with the berattacks. haveore information they about who to taet with thosose attacks, the more effective they can be. we are highly motivated to protect our infnformation andnd
protect whatever lead we may ha as competitors. people canmulate, anif they stea our dat they can respond much more quickly. we are much more protective than we have been i in the last0 years. boggle bank how u work t that -- oversightght standpoint that congress and we journalists have an terest to understand a little bit more on how taxpayeroneys are being spent. we've briefedhe appropriate cotemmittees. vago: let me ask one thing, the basis of the protest is that t e , thers who were doubled bids from the competitors were doubled. why was that done? wasn't done for programmatic reasons? frank: i'm not going to talk
about what was the need for the protest. boggle bank let me ask you about the protesests from the bomber. there was a time when you exhibited a measure of pride in and how topositioit make those decisions and trade-offs in an unimpeachable fashion. use better buying power initiatives, which is we dene different degrees of performance in monetary terms. when they were bidding, they could make well informed decisions about whether or not he gives us greater capability. cases they did a good job.. i was not directly invved in either one.
process,are the legal either in gao or court. anytime you going g to a process like that there are some risks. go: what are the indications of thiss decision eating overturned? frank: i don't expect them totoe overturned. if they are we will decide on the basis -we will lo at the basis of which it is being sustained and en go from there. vago: why would the cost of the program be something that ought to be classified? i could undnderstand subcontractors, because that is a targeting or technology issue. why woululd that -- broadly in this inteterconnected wld, control the flow of technologies a and information thais disseminated electronically? how do you control a world where it is vital to doing this to
beautiful work? frank thing i think do a pretty good job protecting it. the unclassified information is much harder. we do have things in place. the process for three years now to put somee rules into ourur contractssome standards and recently put out a new standard based on feedback. we decided tgive the mililitary more time to implement. we have to move to an area where we are protective. we are going to have to do something even more severe. vago: coming up, pentagon and defense information, you are watching def we're family. we'd do anything for each other. but this time... those bonds were definitely tested.
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frank kendall forcquiuisition, technology, and logistics. are bk withnk we frank kendall for acquisition, technology, and let t -- vago: e are back with frank kendall for acquisition, technologyand logistics. some criticized they suffered is too small and floppyt i asked to kendall from the feedback -- asked kendall about the feedback he is geing from silicon valley and the best way to engaged mystically and locally. frank:e are try to get greater greater areas. it is to bring technology into our systems more quickly, technology we may not have had toqus quickly as we nt through the efforts. it is also designed to bring some pple into our procecess,
working on our problblems that e may not work on otherwise. it is an experimental endeavor. -- the iuxhe a's ux 's bring together different departments and working together on problems from different departments. that given e amount of me we haveeen up this we are off to a good start. are looking atwe of promising technologies and companies. we are engaged. and putng hise eyes a always been g getting soe transactions to occur. that is what is going to be looked ain the valley. success is goioing to be defined it much broader terms for us. it is shorter leadtime, bringing things in. it is a chanange in mindset abot how we go about business. hse, beinge of the
they are notnize as good at that asas we could b. i think it is an ininteresting experiment briringing two a andent cultus together improving from the defense departnt. >> how importantnt is the long-range resrch development plan, in tms of pulling things into the lrtrt p? that is one of the long-range -- and-range roadmaps capabilities you are going to need overtime. work togegether to get you to nirvana? frank: it is related to the third offset strategy. what the next generation that might give us a signifificant advantage er terms of whereional capability,
technology is from can feed those concepts, they are going to be -- we are going to try to get the minutes quickly as we n. set of technology are things like what you have on your cell phone, information technology in technologyogical in many cases, software technologies. they're not products we use directly in many cases. getting many of those things and more quick can give usus an advantage. vago: what of the issues is the size of defense contractors. you saidou want to go to them. as a factoricy mns in making g future and m mandate decisions. are you concerned any oth
contractor is too large at this point, and who are you working with and how do you foresee the process to get you to t the legislation you need frank: i have a draft workingng its way through the appval process. it is fairly simplistic. defense contractors have a mission for the nation they provide us with national security. that is what they are selling, things we are using is operators. ththere is a very strong public interest. about the trend are very general and they are very structural. they a are not about one specifc company or another. they are abouthe continuous movement toward prime weapon system contractors, some of whom are getting larger and larger. it brings a range of factors together.
gave -- they have ve deeper resources alws them to did differently than otrs can bid. and he gives them political influx. if you change the so fundamtally that there only one or two dominant players, think that it's going to affect our outcomes. i nt the goverernment to have more flexibility about control in the shape of e industrial base. vago: one of the issues peopople have is the outcome of the contract is ultimately something that could drive both companies ultimately winning this to divest would do a major merger. what donald douglas sold out to boeing and part of his -- in partecause of his loss. haveve you f foreseen what are e of the industrtrial bay --
industrial base impcations and could there ben accommodation made for a circumstance like th? should think about industrial base impacts fore we start acquisitionon strategi. that should be our plannnning process. and redthe go back f 305i may have restructured itt differently. north of lockheed or boeoeing, that kind of product would be independent of the outcome here. vago: vago: were back witfrank
it he has a reputation as a data-driven leader, and i asked him whether his at her buying power reforms have delivered better results. frank: one of e reasons i stated my position so long is becacause i knowt takes a long time and purpose to really affect change with enterprise being asas complex athe department of defense. when we published our annual about, ition to a talked highlighted the fact there are a number of gogood indicators of progress. schedule is going down, costt control is much better. very y recently i saw a highligt thehe community that shows better buying power initiatives, -- s since thenitiation of the better buying power initiatives, we have two medically changed the trend, particulararly for major program, whichs one of
oumetrics that we use for higher risk programs. that is compelling evidence that we are making a differen. it is not just the policies, it is the acquisisitions -- it is e actions of tens of thousands of peopople. if t there's one thing i i thine have done, it is make those people understand, helelp them understand we want them to do the right ththing and we are gog to reward them doing the right thing. there is no myststery how to brg in a program or struructure a business deal. you just have to do it. i hope we have b been able to provide that. the results i see e now are very compelling. vago: the critics would say going to the lowest cost would lead you to lessss effective systems, and s so that is how yu are saving money. frank: you asked me earlier about how we structure that to pay more for higher performance.
.not l pta -- lpta we have done that on severall programs and it is working. youe up againstst people wowould regard as competito, we have to get a higher performingg system. you asked me a year ago ifif we were not doing enough to strin ourselves from m risk perspectie and i said we were not taking enough risk prelim we need to put ourselves foard. you are doing things that are harder. incentivizing industries to do that for you, so they come up with a system consistent with that, is what we are trying to do. vago: what are your priorities for this last year in office? frank: two words, sustaining momentum. the evidence that is clear now
is very y encouraging to me. i put it t out to the work force to make sure they understand that. we are doing the righthings. one thing that is going to catch onone thing we are going to keep doing is -- all the services except for one exception. i welcome their involvement. they arere required to accept se accountability for the programs. a lot of the resnsibility we have always had, that includes quirements and budgeting. inedibly important t me is taking care of the acquisition woworkforce.
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